BEAUTY IS AS BEAUTY DOES 2004-03-01 (1)

LIZA CASABONA

Beauty may be more than skin deep, but consumers are increasingly aware that at least in part it begins at the surface, retailers said.

As awareness of the health benefits of natural and organic food products begins to level off, natural and organic health and beauty care items are finding their niche within consumers' shopping baskets at conventional and natural retailers alike.

"It is important for us to stay ahead of the trends, to be able to foresee what the next segment is going to be. It's a natural progression for consumers, as they continue to seek out ways to better feed their families, to at some point realize that what you put on your body is important too," said Dana Forsman, business manager, natural, organic and specialty at Ukrop's Super Markets, Richmond, Va. "Natural beauty care products will be the next big trend that we are going to see."

To capitalize on the growth potential they are seeing in these beauty categories, retailers are employing a variety of merchandising strategies to take advantage of category potential. Ukrop's operates a segregated natural products section, as do many conventional retailers seeking to build up customer awareness of natural product offerings.

"We operate a store-within-a-store format. We've found that this is a really effective way to grow this business and let people know that we are in the natural and organic business," Forsman said.

Ukrop's has employed the store-within-a-store format for its natural and organic products in 15 of its 29 stores, and has used a fully integrated approach to natural and organic products in one store. The first store-within-a-store opened about five years ago, Forsman said.

In many supermarkets, beauty care products are merchandised as part of a natural lifestyle presentation in store-within-a-store sections that include everything from nutritional supplements to books and yoga tools.

The first wave of a new kind of product, like natural HBC items, is almost always merchandised in a segregated section, said Bill Bishop, president, Willard Bishop Consulting, Barrington, Ill. A segregated section is needed at first to draw attention to an item, and later sales will increase when that product is integrated with other comparable products.

"Until mainline retailers get their minds around how to sectionalize this and draw attention to the proposition at an order of attention above the product level, you probably won't see too much integration," Bishop said. Some forward-thinking retailers are doing this, but most have to wait for a product to have enough volume to justify placement in mainline aisles next to conventional competitors.

Retailers, like Ukrop's and Raley's, West Sacramento, Calif., are moving toward a hybrid model that is part of the store-within-a-store and also partially integrated with natural HBC and other home items.

"We are looking at ways to expand our natural HBC business, possibly outposting some body care products in the natural and organic section, or carving out a section in the conventional HBC aisle," Forsman said.

Ukrop's is looking at giving top performing categories dual exposure in conventional aisles to help move business forward, Forsman said. Integrati is one possible solution.

Integration is where most retailers will probably move with their natural and organic offerings, said Jim Wisner, president, Wisner Retail Marketing, Libertyville, Ill.

"People are not exclusive shoppers, it's not like anyone is exclusively an organic or non-organic shopper. About half of customers do buy organic products, but that doesn't mean they don't buy conventional products as well; it is infinitely better to get all the products in one place," Wisner said.

Raley's also merchandises its natural and organic offerings in a separate store-within-a-store format through most of the chain. But some stores are doing outposts of sections within other aisles. Recently, Raley's started merchandising environmentally friendly cleaning products from Seventh Generation, Burlington, Vt., and other suppliers in a segregated four-foot section in the detergent aisle, said Julie Steffan, grocery category manager.

"We really wanted to bring awareness to the consumer who might be looking for these products," Steffan said. (See "All Together Now -- Or Not," Page 43.)

For natural and organic niche retailers, HBC items, while always part of product offerings, have moved to a more impactive role as consumers embrace a natural way of life that reflects more than just eating habits.

"The prognosis for growth in natural HBC is very positive as consumers become more conscious that what they put on their bodies is as important as what goes in their bodies," said Kathi Danaher, category manager, personal care, Wild Oats Markets, Boulder, Colo.

Wild Oats features a Natural Living Department in its stores that merchandises lifestyle items like yoga and Pilates tools together with HBC items, vitamins, essential oils, supplements and cosmetics. The chain first implemented the "one-stop-shop" format in a new store it opened in 2002 in Long Beach, Calif., which has become the prototype for new Wild Oats stores, Danaher said.

The mixed offerings of the Natural Living Department represent a holistic approach that Danaher said is a natural evolution of consumer awareness of healthy eating habits.

"It's wrapping the whole thing up with a bow. You can come in and get vitamin C to take internally, get some vitamin C for your face, find a yoga mat to relax with, and find some music tapes to unstress to. It's a full-service department."

Earth Fare, Asheville, N.C., a natural foods operator, also offsets its nutritional and personal care categories with lifestyle products like yoga care in some stores. In the chain's Asheville store, there is a separate library section, said Troy DeGroff, director of sales and marketing.

Ukrop's also added books and yoga and Pilates tools into its natural business. The books are merchandised on shelves under a Healthnotes kiosk, Forsman said. Healthnotes, Portland, Ore., are interactive kiosks that offer information on a wide range of health topics. The Healthnotes kiosks are located in the center of Ukrop's store-within-a-store natural sections. All section managers are required to demo new natural products at the kiosks to achieve customer awareness, Forsman said.

The natural and organic HBC aisles offer retailers the next wave of natural growth. There's a lot of potential in this area, Bishop said.

"The only thing you have to make a distinction on is where does this fit in terms of how people want to spend their money," he said.